JAGADISAN J.

The following questions have been referred to this court under section 66 of the Indian Income-tax Act

"1. Whether the assessment on the assessee computing the profit under rule 2(a) in respect of the Indian branch of the Winterthur Life Assurance Company Ltd. and adopting the surplus under rule 2(b) in respect of its own business in the single assessment raised for that year is valid ?

2. Whether the assessee is entitled to exemption of Rs. 43, 588 under section 4(3)(xii) of the Income-tax Act in each of the aforesaid assessment ?" *

The assessee, the United India Life Assurance Company Ltd., was formerly carrying on life insurance business. The Life Insurance Corporation of India has taken over that business and the assessee is now represented by the Corporation. A Swiss company called Winterthur Swiss Life Insurance Company was carrying on life business in India through its agents, Messrs. Volkart Brothers. The assessee entered into an agreement with the Swiss company on October 1, 1952, and this agreement was superseded and substituted by another agreement between them dated December 29, 1952. We shall refer to the terms of the agreement in detail a littl